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More
than 6 million low-income Medicare beneficiaries would be denied the
Medicare prescription drug benefit under the Senate version of the Medicare
drug bill, according to a new Center analysis. Known as dual eligibles
because they are fully eligible for both Medicare and Medicaid, these 6
million individuals about a sixth of all Medicare beneficiaries  would
continue to receive drug coverage through Medicaid. But that coverage
would vary from state to state and would likely be more restrictive in many
states than the new Medicare drug benefit, since many state Medicaid
programs limit the availability of prescription drugs.

Many of Medicares poorest participants will likely end up with less drug coverage than Medicare recipients who are better off, stated
Leighton Ku, the reports author.

Every state contains Medicare beneficiaries who would not receive the
Medicare drug benefit under the Senate bill, and nearly half of the states
contain more than 100,000 such individuals. These states include
California(where 915,000 Medicare beneficiaries would be ineligible for the Medicare
drug benefit when the benefit takes effect in 2006),
New York
(559,000),
Texas
(447,000),
Tennessee(214,000),
Illinois
(155,000), and
Louisiana
(119,000). The Centers report lists the number of individuals in each of
the 50 states and the
District of Columbia
who would be affected.

Bill Abandons Medicare Commitment to Universal
Coverage

Another new Center report, authored by
Melanie
Nathanson,
Edwin Park,
and Robert Greenstein, examines the broader context of the Senate bill.Since
the creation of Medicare in 1965, its bedrock principle has been
universality, or the promise that upon turning 65, all Americans would be
eligible for full Medicare benefits regardless of their income, place of
residence, or ethnicity. Never before in the programs history has a
Medicare beneficiary been denied access to a covered Medicare benefit. In
the case of benefits that both Medicare and Medicaid cover, Medicare has
always been the primary payer.

The Senate bill would abandon universality and
create a two-tiered Medicare system that excludes many seniors and people
with disabilities from the drug benefit essentially because they are poor.
In contrast, the Houses Medicare drug bill  though it contains a number
of other troubling provisions that raise serious concerns  would maintain
the universality of Medicare benefits by ensuring that all beneficiaries,
including dual eligibles, are eligible for the drug benefit.

Fiscal Burden on States Would Continue to Grow

In recent years, Medicaid has paid
an increasing share of the cost of health coverage for elderly and disabled
people, while the share of this cost paid by Medicare has shrunk. One
reason is the expanding use of drug therapies, the cost of which is borne
entirely by Medicaid. Another reason is that Medicare doesnt cover the
cost of long-term care, leaving Medicaid wholly responsible for nursing
home coverage.

Since Medicaid is jointly financed by the
states and the federal government while Medicare is wholly federally
funded, the growth in Medicaids share of the cost of covering elderly and
disabled people has squeezed state budgets, especially during the current
economic slump. That pressure will intensify in coming years as the
number of elderly and disabled individuals increases due to the baby
boomers retirement.

As states are forced to allocate an increasing
share of their Medicaid budget to their growing elderly and disabled
caseloads, they will likely be unable to maintain adequate health coverage
for other Medicaid beneficiaries, such as children, pregnant women, and
working parents. Large cuts in Medicaid eligibility or benefits for
these groups could result.

To address this problem and help
states continue to afford to finance their share of Medicaid costs when the
baby boomers retire, the nations governors have recommended on a
bipartisan basis that the federal government assume more of the cost of
health coverage for people who are eligible for both Medicare and
Medicaid. Including these dual eligibles in a Medicare drug package would
be an important step in this direction. The House drug bill takes this
step but the Senate bill does not.

Cuts in Medicaid Eligibility for Elderly and
Disabled Could Result

Under the Senate bill, a number of
states also would have a strong incentive to reduce Medicaid eligibility
for elderly and disabled individuals. Currently, 19 states[1]
cover more elderly and disabled people than federal law requires; most of
them cover such individuals with incomes up to the poverty line, while the
federal requirement is only 74 percent of the poverty line. The Senate
bill would create a perverse incentive for these 19 states to scale back
eligibility for full Medicaid coverage part or all of the way to the
federal minimum level. By doing so, they would shift from Medicaid to
Medicare, and hence to the federal government, the costs of prescription
drug coverage for the elderly and disabled individuals who would no longer
be eligible for Medicaid.

Though these individuals would receive drug
coverage through Medicare, they could lose coverage for vital services that
Medicaid covers but Medicare does not, such as nursing home care, home and
community-based care for frail elderly and disabled individuals seeking to
remain in their home rather than enter a nursing home, and acute care
services such as vision and dental services. As a result, these poor
elderly and disabled individuals could end up with worse health care
coverage than they have now.

The Center on
Budget and Policy Priorities is a
nonprofit, nonpartisan research organization and policy institute that
conducts research and analysis on a range of government policies and
programs. It is supported primarily by foundation grants.